"Thank you to the IRFU for their support and patience and thanks also to so many people who have adopted my family and me, making us feel part of the community here in Ireland," Schmidt said.
"There are some inspiring challenges over the next 11 months so there's plenty of motivation for me to continue working hard, alongside the other management staff, so that the team can be as competitive as possible."
Schmidt's son, Luke, has battled a brain tumour since age four and suffers from epilepsy. Luke needed a nine-hour operation at the age of six to remove the tumour.
The value Schmidt placed in being close to world-class London-based neurological care is a major reason he turned down multiple approaches from NZ Rugby to return home.
Schmidt has overseen the most successful period in Ireland's history, winning three Six Nations titles (2014, 2015) including a Grand Slam (2018), a first win on South African soil (2016), a first win over New Zealand (2016) and a series win in Australia (2018).
Andy Farrell will become Ireland head coach after the Rugby World Cup, while Hansen is expected to make a decision about his future within the next 48 hours.